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16 February 2018

CEO blog: Scotch in the States, Whisky in Wuhan, and distilleries in the Highlands

Scottish Countryside
In the last three weeks I've celebrated Burns Night in New York, joined the Prime Minister on her visit to China, and then spent a few days visiting both established and new members in the Highlands and on Skye. New York was my first visit to the US in my current role.

In China, I was one of 50 business leaders considering, alongside the Prime Minister and the Secretary of State for International Trade, Liam Fox, how UK businesses make the most of pre and post-Brexit opportunities in the world's largest consumer market.

The US and China are markets growing in value for Scotch. Americans have been enjoying it for many years, including in the White House (a tradition that began with President Benjamin Harrison accepting a gift of Dewar's Old Highland Whisky from Andrew Carnegie - which stimulated a surge of interest in Dewar's in particular and Scotch in general - and that has continued over the years).

The US is now our most valuable market, to the tune of £922m in 2017, and one where consumers have a growing appreciation in particular for single malts. The Scotch Whisky Association (SWA) works hard, alongside company representatives, to reduce the "behind the border" bureaucracy that can still complicate shipments to the US.

China, on the other hand, is still a relatively small market but full of potential. In recent years Scotch Whisky's share of the spirits market has been around 0.1%. While spirits are popular in China, Chinese consumers still favour locally made baiju. Many of our members are working hard to build a base of Chinese consumers, tempting them away from baiju, and they are making headway. We expect this to pay dividends in the long term - China's middle class is growing, and developing a taste for not only European luxury products but for products with the authenticity and tradition of Scotch.

Again, the SWA works to smooth the way for exports of Scotch to China. We were pleased with the recent 5% reduction of the import tariff, and we continue to lobby the Chinese government to remove other barriers to trade, with UK and Scottish government support.

SWA Chief Executive, Karen Betts

As the UK approaches Brexit, it was clear to me on these visits that Scotch must continue to think and act globally. In order to hedge against possible disruption in EU export markets as the UK leaves the EU, we are working to increase the resilience of our non-EU markets, including through tackling barriers to trade and growth. Of course, with 30% of Scotch Whisky exports going to the EU (where France remains our largest market by volume) we continue to press for the best possible outcome for Scotch on Brexit. We would like to see a status quo transition period (including continuing to benefit from existing EU Free Trade Agreements in that period), and the UK government negotiating ambitious future trade arrangements with the EU and non-EU markets that are important our future growth.

I rounded-off these trips with a visit last week to one of our long-standing members - the Ben Nevis Distillery, at the foot of the highest mountain in the British Iles - and to two of our newer members - the Isle of Raasay Distillery and Torabhaig Distillery. We discussed the range of issues - from how they are faring in overseas markets (well, with each describing the hard miles they walk to build a consumer base first in the UK and then internationally), to whether you can grow barley in the Western Iles (difficult, but not impossible), to tourist numbers (visits to distilleries remain on the rise).

As ever, it was fascinating to see more of the dynamism and creativity that goes into the diversity, from blends to single malts, that is Scotch Whisky, at home and globally, from production to sales. I can't help agreeing with Mark Twain that "too much of anything is bad, but too much good whisky is barely enough".